SAN JOSE — PG&E believes it can withstand expected fines of up to $3.6 billion resulting from the fatal 2010 gas pipeline explosion in San Bruno without having to file for bankruptcy, the utility’s top executive said Wednesday.

PG&E Chief Executive Officer Anthony Earley, in a wide-ranging interview with the editorial board of this newspaper, also said the utility was surprised by a charge of obstruction of justice in its most recent federal criminal indictment, and asserted that PG&E is making good progress on efforts to upgrade its natural gas system.

The federal criminal charges against PG&E in the San Bruno case could lead to a fine of up to $1.13 billion, and a state Public Utilities Commission probe could result in a fine of up to $2.45 billion, but Earley said those penalties would not push the utility into bankruptcy. However, large fines would require PG&E to approach the capital markets for financing in the form of sales of stock to the public, he said.

Regarding the federal obstruction of justice charge against PG&E for allegedly impeding a National Transportation Safety Board investigation of the explosion, Earley said, “That did come as a surprise.”

Earley offered praise for PUC President Michael Peevey, the powerful head of the state agency that regulates PG&E and numerous other utilities in California. Peevey is under fire from critics who say he has created a lax regulatory atmosphere at the PUC. Numerous emails have surfaced in recent weeks that suggest a cozy relationship between the PUC and PG&E that some critics say could cause the state commission to go easy on PG&E as it considers fines and rates for the utility.

But according to Earley, “Mike Peevey has a reputation that is well deserved of being one of the most forward-looking regulators in the U.S.”

Earley’s praise of Peevey irked city officials in San Bruno who have been pressing Gov. Jerry Brown to strip Peevey of his role as the president of the PUC.

“We have a need for fair, open, honest regulation of our utilities and to promote the safety of the public, but the PUC has not done that under Peevey’s leadership,” San Bruno City Manager Connie Jackson said in an interview Wednesday. “And the matter before the PUC regarding the penalty for the explosion cannot be decided fairly as long as Mr. Peevey is participating in the decision.”

Mindy Spatt, a spokeswoman for The Utility Reform Network, a consumer group, said a lack of oversight by the PUC may have caused PG&E to be taken by surprise by the obstruction of justice charge.

“PG&E has become so accustomed to the laxity of the PUC that they are surprised when the federal prosecutors exert their authority,” Spatt said. “There is actually a speed limit that PG&E has to follow. The feds actually expect their rules to be followed.”

Earley’s assessment that PG&E can avoid bankruptcy was welcomed by TURN officials.

“That is a more responsible message than what PG&E had given Wall Street earlier, when they were threatening to file for bankruptcy if they received the maximum fines,” said Mark Toney, TURN’s executive director. “The issue is what is the appropriate penalty, not only for all the death and destruction in San Bruno, but the negligence that led to it.”

Earley said he is looking forward to a time when the utility can put the regulatory punishments and the criminal case behind it.

“We can focus on the really cool stuff and the new technologies, how to make California’s energy system the best in the world,” he said.

Still, with the four-year anniversary of the San Bruno explosion in September 2010 just weeks away, Earley said PG&E must never forget the disaster, which killed eight people, injured 66 and wrecked a neighborhood.

“We need to always keep San Bruno in front of us from a safety standpoint,” Earley said.

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